Kumba, Amsa agreed one-year iron ore price

[miningmx.com] – ANGLO American’s listed subsidiary, Kumba Iron Ore, agreed a new one-year supply deal with ArcelorMittal South Africa (Amsa) in which it would sell a maximum of 4.8 million tonnes of iron ore to the steelmaker.

The weighted average price of the iron ore was $65/t in a deal that replaces a previous interim supply agreement due to expire at the year-end.

“We committed to reaching an agreement,” Themba Hlengani, Amsa spokesperson, told Bloomberg News.

The agreement is a continuation of an interim pricing regime which is in place while the two companies arbitrate on a long-term price. Kumba said in 2010 it was released for a cost plus 3% price structure after Amsa failed to renew a mining licence.

Amsa has disputed the position with talks set to continue from February next year, according to an announcement earlier this month.

The new interim pricing agreement will last to December 31 or until conclusion of the legal processes, the companies said.

The price agreement comes amid criticism from within government that the cost plus pricing agreement had not been passed on by Amsa to the steel end-user. Equally, government is unlikely to give its support to an increase in the price of iron ore as it seems determined to impose a developmental steel pricing policy.

The Department of Trade and Industry said earlier this month that it wanted to establish its own niche steel production capacity and that holders of foreign capital were examining the proposal.